Peter Schiff says America could usher in a new era of wide-open immigration and economic growth, but only if the country dismantles the welfare state he believes gives some people an incentive to come to the U.S.
“The lesson is that immigration is not the problem,” Schiff, an American stockbroker and financial commentator, wrote in a post on X. “The problem is the welfare state. Shut off that magnet and America will no longer attract people looking for free stuff.”
But the safety net Schiff is talking about reaches well beyond newly arrived immigrants. In 2022, nearly a third of the U.S. population received assistance through at least one means-tested program, according to the Census Bureau. That includes programs such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP), the Children’s Health Insurance Program, and SNAP for Women, Infants and Children, among many others.
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Many of the people relying most heavily on those programs aren’t working-age adults, as children make up 54% of Americans receiving benefits from three or more means-tested programs, Census data shows.
Why Schiff thinks open borders and welfare can’t coexist
Schiff points specifically to the Gilded Age, a period stretching from the late 1800s into the early 1900s that was known for industrialization and economic growth. As factories, railroads and other industries expanded, wages rose alongside them.
Between 1860 and 1890, wages increased by around 50%, with particularly strong gains for skilled workers including carpenters, engineers and blacksmiths.
Immigration was also on the rise. Nearly 12 million immigrants arrived in the U.S. between 1870 and 1900, according to the Library of Congress. Some were pushed out of their home country by famine, crop failures and rising taxes, while others saw the U.S. as a place to find work and greater economic opportunity.
“They could stay as long as they wanted, work wherever they wanted, buy property, start businesses and basically do anything any American citizen could do,” Schiff wrote, referring to immigration in the late 1800s.
But that era didn’t feature completely open borders. While immigration was less regulated than it is today, particularly for Europeans, restrictions were already emerging, including the Chinese Exclusion Act of 1882.
Schiff argues another major difference between then and now is the size of the federal safety net, and research lends limited support to his “welfare magnet” theory. A 1998 National Bureau of Economic Research study by economist George J. Borjas found immigrant welfare recipients were more concentrated in states offering more generous benefits, suggesting welfare generosity may have influenced where some immigrants chose to live.
Still, that doesn’t necessarily mean welfare is what draws immigrants to the U.S. in the first place. A 2024 Pew Research Center survey of Asian immigrants found family, economic opportunity and education were among the most common reasons they gave for coming to the U.S.
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Who actually relies on America’s safety net?
Research suggests welfare generosity can influence where some immigrants settle, but that’s different from the belief that benefits are a primary reason people come to the U.S.
Many immigrants also don’t immediately qualify for assistance. Eligibility for programs such as SNAP and Medicaid depends on immigration status, and many lawful immigrants face a five-year waiting period before they can receive benefits.
But benefits are only one side of the fiscal picture. The Congressional Budget Office estimates immigrants who arrived as part of the recent immigration surge will pay about $788 billion in federal income and payroll taxes between 2024 and 2034.
Once the broader economic effects are factored in, the CBO projects the surge will increase federal revenues by about $1.2 trillion and reduce federal deficits by roughly $900 billion over the decade.
However, that doesn’t mean immigration comes without a price tag. State and local governments can feel the costs much sooner. CBO estimates the recent immigration surge resulted in a direct net cost of $9.2 billion to state and local governments in 2023, driven largely by higher spending on schools, shelter and other public services.
Schiff’s argument points to a real tension: A larger population can put more pressure on government services, particularly in communities absorbing large numbers of newcomers. But that’s only one side of the story. Immigrants also work, pay taxes and contribute to the economy, while many face restrictions on the federal benefits they can receive.
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Victoria Vesovski is a Toronto-based staff reporter at Moneywise covering personal finance, lifestyle and trending news. She holds degrees from the University of Toronto and New York University, and her work has appeared on platforms including Yahoo Finance, MSN Money and Apple News.
